On Tuesday The Wall Street Journal reported that AbbVie Inc. (ABBV, Financial) is a whisper away from the successful completion of a $188.24 share bid for the acquisition of Allergan Plc (AGN, Financial) for a total consideration of over $60 billion.Â
As a result of this transaction, AbbVie will become a leading company in the profitable market for Botox, several popular eye treatments, other beauty drugs and treatments for the central nervous system and gastroenterology therapeutic areas.
Allergan's portfolio is organized in three main segments: U.S. specialized therapeutics, U.S. general medicine and international. In 2018, it made total revenue of nearly $16 billion and free cash flow of $5.4 billion.
Thanks to a dense sales network, which enabled the distribution of leading brands and best-in-class treatments in approximately 100 countries across the world, Allergan increased revenue by 23% and free cash flow by 15% over the last five years. Allergan pays an annual dividend of $2.90 per common share.
As of March 3, the Irish global pharmaceutical company had total assets of $98.04 billion and total liabilities valued $36.48 billion. The equity was worth $61.54 billion. The company employs about 17,800 people worldwide.
AbbVie pays a $1.07 cash quarterly dividend per common share which – based on the share price of $78.45 at close Monday – means a forward dividend yield of $5.43%. The dividend is 377 basis points higher than the industry median of 1.66%.
Shares of AbbVie may head higher following the news.
Year to date, shares of AbbVie declined by 15% to close at $78.45 on Monday while shares of Allergan fell 3% to close at $129.57.
AbbVie has a market capitalization of $115.98 billion, a price-earnings ratio of 22.48 versus the industry median of 23.77 and a price-sales ratio of 3.65 versus the industry median of 3.1.
Allergan has a market capitalization of $42.47 billion, a price-earnings ratio of 6.04 versus the industry median of 23.77 and a price-sales ratio of 2.77 versus the industry median of 3.1.
Disclosure: I have no positions in any securities mentioned.
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